Microsoft's "technical error" violated antitrust agreement for more than a year.

European regulators today fined Microsoft €561 million (or $732 million) for failing to offer Windows users a choice of Web browsers as the company had been required to do.

A previous antitrust agreement required Microsoft to present users a choice of Web browsers in addition to its own Internet Explorer, such as Firefox, Chrome, Opera, and Safari. Microsoft did so for most versions of Windows, but an apparent accident caused the browser ballot to be stripped out of Windows 7 when its first service pack was released.

Microsoft admitted to the mistake last year, attributing it to a "technical error." The browser ballot screen was missing on Windows 7 from May 2011 until July 2012, although users could still change their default browser in Windows settings. Microsoft confirmed the mistake and distributed a software fix after EU officials notified the company of reports that users weren't being offered the browser choice.

Today's fine is the first time EU regulators "have punished a company for neglecting to comply with the terms of an antitrust settlement, and it could signal their determination to enforce deals in other cases, including one involving Google, where such an agreement is under discussion," the New York Times said.

Microsoft reiterated today that it accepts responsibility for the violation. "We take full responsibility for the technical error that caused this problem and have apologized for it," Microsoft said. "We provided the Commission with a complete and candid assessment of the situation, and we have taken steps to strengthen our software development and other processes to help avoid this mistake—or anything similar—in the future."

The European Commission announcement of the fine said Microsoft's mistake meant 15 million European users of Windows did not see the browser choice screen.

"In 2009, we closed our investigation about a suspected abuse of dominant position by Microsoft due to the tying of Internet Explorer to Windows by accepting commitments offered by the company," Commission VP Joaquín Almunia said in the announcement. "Legally binding commitments reached in antitrust decisions play a very important role in our enforcement policy because they allow for rapid solutions to competition problems. Of course, such decisions require strict compliance. A failure to comply is a very serious infringement that must be sanctioned accordingly."

The agreement to provide the browser ballot stemmed from Microsoft's dominant position in the Web browser market and the influence it has over users' choice of browsers as the maker of the world's most widely used operating system. Internet Explorer today holds 56 percent of the worldwide desktop browser market share. Microsoft committed to making the browser choice screen available for five years, until December 2014. While admitting the mistake last year, Microsoft offered to extend the time it will offer the browser choice screen by 15 months. The EU announcement today did not say whether it will require Microsoft to do that, and Microsoft declined to comment on the proposed 15-month extension.

The EU described why it believes the choice screen is important and why the fine was necessary:

The choice screen was provided as of March 2010 to European Windows users who have Internet Explorer set as their default web browser. While it was implemented, the choice screen was very successful with users: for example, until November 2010, 84 million browsers were downloaded through it. When the failure to comply was detected and documented in July 2012, the Commission opened an investigation and before taking a decision notified to Microsoft its formal objections in October 2012.

This is the first time that the Commission has had to fine a company for non-compliance with a commitments decision. In the calculation of the fine the Commission took into account the gravity and duration of the infringement, the need to ensure a deterrent effect of the fine and, as a mitigating circumstance, the fact that Microsoft has cooperated with the Commission and provided information which helped the Commission to investigate the matter efficiently.

The EU could have fined Microsoft up to 10 percent of its "total turnover in the preceding business year." Microsoft's fiscal 2012 worldwide revenue was $73.72 billion and its operating income was $21.76 billion. Microsoft's cash reserves total $68 billion.

The Times noted that fines levied by the EU are usually much lower than the maximum allowed. "The largest fine ever levied by the European authorities in an antitrust case was €1.1 billion, or $1.4 billion, in 2009 against Intel for abusing its dominance in the computer chip market," the Times wrote. "Intel is still appealing that ruling."

Microsoft's public statements on the browser ballot error seem to indicate that it will not appeal.

Microsoft implemented the browser ballot screen on Windows 8 for EU users when the latest version of Windows was released last year. Windows RT, the version of Windows 8 for ARM-based tablets and desktops, is more tightly locked down. "Windows RT only allows third-party applications that run in the tightly restricted Metro environment. These restrictions preclude the implementation of high-performance Web browsers," we noted in a story last year. Windows RT is a direct competitor to the iPad, which also places restrictions on third-party browsers.

Microsoft won't be forced open up Windows RT. Last October, Almunia said, “We have looked at Windows RT and on the basis of our investigation so far, there are no grounds to pursue further investigation on this particular issue."

170 Reader Comments

So why doesn't the same thing happen with Apple for gimping 3rd party browsers for example?

I understand it's not an apples to apples comparison between a desktop OS and an embedded device on ARM, but at least with Android 3rd party applications have the same access to the OS API's that the stock ones do.

I really enjoy Chrome on the iPad we have, but performance is brutal compared to Safari.

That is one expensive oversight. I can't imagine it being anything more than that (the original settlement was quite clear), but I wonder how it went for a full year without being reported (especially with all the anti-Microsoft people examining their every action).

I'm still of the opinion the entire thing is completely ridiculous to force this kind of thing. iOS and Android don't come with forced browser ballots when you first boot up those machines despite iOS' and Android's market dominance in the tablet and phone sectors respectively. It's insane to punish Microsoft for bundling a browser with their OS in this day and age. It's not as if they're preventing you from installing a new one or anything.

As pointless as the browser ballot may be, the fact is that they agreed to show users one, and then didn't for over a year, while they were fully aware of the sanctions. I find the whole ballot ridiculous but if you agree to something, stick to it.

It's Microsoft's proprietary software. Why should they be forced to offer software from other companies on their software platform? There's never been anything preventing people from getting Firefox or Chrome.

It's Microsoft's proprietary software. Why should they be forced to offer software from other companies on their software platform? There's never been anything preventing people from getting Firefox or Chrome.

This fine is because of Microsoft's behavior back before there was a Firefox or Chrome.

So why doesn't the same thing happen with Apple for gimping 3rd party browsers for example?

I understand it's not an apples to apples comparison between a desktop OS and an embedded device on ARM, but at least with Android 3rd party applications have the same access to the OS API's that the stock ones do.

I really enjoy Chrome on the iPad we have, but performance is brutal compared to Safari.

Because Microsoft was sued for antitrust violations, and the "browser choice" rule was part of the punishment.

So why doesn't the same thing happen with Apple for gimping 3rd party browsers for example?

I understand it's not an apples to apples comparison between a desktop OS and an embedded device on ARM, but at least with Android 3rd party applications have the same access to the OS API's that the stock ones do.

I really enjoy Chrome on the iPad we have, but performance is brutal compared to Safari.

You are right, it should happen to Apple to. They have a monopoly in tablet/smartphone devices after all.

Between what I've read about Google's and other tech companies' problems... and those faced by the company I work for with VAT and such... it's starting to seem like the only viable business strategy for American companies in Europe is to stay the hell out.

Between what I've read about Google's and other tech companies' problems... and those faced by the company I work for with VAT and such... it's starting to seem like the only viable business strategy for American companies in Europe is to stay the hell out.

Or, you know, obey the law.

Now, now... You know that's unfair. Corporations don't have to obey the law in America. Why should they have to do so in Europe?

So why doesn't the same thing happen with Apple for gimping 3rd party browsers for example?

I understand it's not an apples to apples comparison between a desktop OS and an embedded device on ARM, but at least with Android 3rd party applications have the same access to the OS API's that the stock ones do.

I really enjoy Chrome on the iPad we have, but performance is brutal compared to Safari.

I'm still of the opinion the entire thing is completely ridiculous to force this kind of thing. iOS and Android don't come with forced browser ballots when you first boot up those machines despite iOS' and Android's market dominance in the tablet and phone sectors respectively. It's insane to punish Microsoft for bundling a browser with their OS in this day and age. It's not as if they're preventing you from installing a new one or anything.

You need to remember the context. Earlier in the last decade Microsoft was (almost entirely) a monopoly on desktops and in the browser space. Smart phones weren't really around, Macs were still a very marginal product, Linux was for geeks only... You can't compare the computing space then with now, but just because things have changed doesn't mean that Microsoft can ignore the repercussions of their actions.

There has to be a point where Microsoft says "**ck'em" and stops selling Windows OS in Europe. Sure they will loose some $$, but how much could it possibly hurt them compared to the fines. If the Europeans have so little else to do other than punish a company for selling software, would serve them right to have to import copies. HaHa!!

That would be really funny.Of course, it might be less funny after a few years if Windows were replaced with Linux or OS X throughout the EU. It might seem like a bad idea then.

There has to be a point where Microsoft says "**ck'em" and stops selling Windows OS in Europe. Sure they will loose some $$, but how much could it possibly hurt them compared to the fines. If the Europeans have so little else to do other than punish a company for selling software, would serve them right to have to import copies. HaHa!!

Yeah, instead of just paying another billion dollar fine and trying not to run afoul of the law again, Microsoft should just throw away billions of future revenue forever.

Ballmer, time to step down and let StLCards step up. This one has vision.

There has to be a point where Microsoft says "**ck'em" and stops selling Windows OS in Europe. Sure they will loose some $$, but how much could it possibly hurt them compared to the fines. If the Europeans have so little else to do other than punish a company for selling software, would serve them right to have to import copies. HaHa!!

That would be really funny.Of course, it might be less funny after a few years if Windows were replaced with Linux or OS X throughout the EU. It might seems like a bad idea then.

Would be quite interesting if there was an EU wide Linux development drive aimed at making Linux more desktop friendly and deal with the bugs and hardware issues. Just get every country to sponsor a couple developers each to work on it and it'd have one hell of an impact on whatever distro they decided to work on, and probably wouldn't be something Microsoft would be too happy about

Between what I've read about Google's and other tech companies' problems... and those faced by the company I work for with VAT and such... it's starting to seem like the only viable business strategy for American companies in Europe is to stay the hell out.

On the other hand over her we hear that only way to do business in US is to have US partner as all the rules and even more court decisions will always go against a foreign company no matter what.

After all Samsung was fined 1 bil for having square phones and few other such details.

MS messed up and violated terms of their agreement with the EU. I don't see what the contention here is. Smart of them to offer to add the ballot time back instead of a fine. Essentially what they do for XBox Live players when the service is down.

That is one expensive oversight. I can't imagine it being anything more than that (the original settlement was quite clear), but I wonder how it went for a full year without being reported (especially with all the anti-Microsoft people examining their every action).

The EU needs money. this is an old fashioned shakedown.

The EU has a history of fining its own companies just as much as American companies. Besides, it Microsoft wanted to avoid the fine, they could have started with not basically giving the EU court the bird and complying promptly with directions. But sometimes a child's hand needs to be slapped.

If you want to run OSX (Legally) you have to buy an Apple computer (Monopoly!!!!!), why don't they have to let the users pick which web browser they want?

Microsoft was in a monopoly position not with Windows computers, but with all computers. They used this power to force Internet Explorer down everyone's throats and then abandoned IE for a while, harming everyone's internet experience. Because of this, and other monopolistic tactics, both the US and EU fined MS and set up anti-trust agreements.

The EU one included a more aggressive option for browser choice, called the Browser Ballot, because the EU believes that access to the internet should be considered a human right, and no one company should dictate that access.

Apple's position then (and now) is not even close to one of monopoly. Yes, if you decide to enter their ecosystem, it's their way or the highway, but their ecosystem is still a minority player in every market they are in. They don't hold a monopoly position anywhere.